BackgroundA North American consumer goods company planned to enter the China market through a joint venture with a local distributor. The Chinese counterparty claimed to have strong retail channels and government relationships. The client’s international counsel recommended independent corporate intelligence in China before committing to the deal.Challenges
- Public information provided by the Chinese partner was incomplete and inconsistent.
- The proposed JV structure involved multiple affiliated entities and individual shareholders.
- The client needed to move quickly to keep commercial momentum, but also wanted a clear picture of integrity risks, litigation history, and real operating capabilities.
Our Approach
- Multi‑Source Company Background Check
We conducted a comprehensive China company background investigation on the proposed JV entity and key affiliates, covering registration records, shareholding, ultimate beneficial owners, business scope, licenses, and change history.
- Litigation, Enforcement and Regulatory Record Screening
Using court databases and regulatory sources, we mapped lawsuits, enforcement actions, administrative penalties, product quality recalls, and IP disputes involving the group and its principals.
- Reputation and Integrity Enquiries
Through discreet market inquiries and open‑source research, we assessed the partner’s reputation with suppliers, distributors, and local business communities, including past allegations of kickbacks or improper relationships.
- On‑the‑Ground Verification
Our team conducted site visits to warehouses and offices to confirm operational scale, inventory levels, and staffing. We verified whether key retail channels mentioned by the partner actually existed and were active.
- Red‑Flag Report and Deal Recommendations
We delivered a bilingual report highlighting strengths, weaknesses, and risk indicators, with an executive summary tailored to board‑level decision‑making. We also proposed adjustments to the JV structure, governance, and contract protections.Results
- The investigation revealed undisclosed related‑party dealings, past product seizure incidents, and significant arrears to other suppliers.
- Based on our findings, the client decided not to proceed with the original JV proposal and instead pursued a more limited distribution arrangement with stronger contractual protections and exit options.
- The client avoided a likely high‑risk partnership and gained a repeatable due diligence framework for future China projects.
Key Takeaways
- Independent corporate intelligence and due diligence in China can reveal issues that standard data‑room materials will not show.
- Understanding litigation and enforcement history of Chinese partners is essential before entering long‑term or capital‑intensive arrangements.
- Practical, business‑oriented reporting enables foreign decision‑makers to balance risk and opportunity.
Call to ActionIf you are considering a joint venture, acquisition, or key supplier relationship in China, our corporate intelligence team can help you make informed, defensible decisions.